September 2010
In the last issue of Law Update we looked at arbitration: what it is and what is involved in a set of arbitration proceedings. This month we will look at mediation.
Mediation is a form of alternative dispute resolution (ADR). Compared to litigation or arbitration, mediation is considered to be a less contentious and more amicable forum within which parties can attempt to settle their disputes. It is designed to avoid confrontation.
A third party, the mediator, is involved in order to give structure to the process and to assist the parties to come to a final decision based on the facts presented throughout the discussions. It is important to remember that unlike arbitration or litigation, where the arbitral tribunal or judge issues a decision, the mediator does not hand down a decision. Further, the mediator does not have an advisory role, and nor is he or she there to act as advocate for one or both of the parties. Put simply, the mediator is there to facilitate the parties reaching a decision themselves.
It is also important to note that unlike arbitration or litigation, the outcome of mediation is only legally binding if the parties have so agreed. Generally, the parties will enter into an enforceable settlement agreement reflecting what they decide during the mediation process.
What is the benefit of mediation?
Quite often, tiered dispute resolution clauses provide that mediation must be attempted before arbitration or litigation proceedings are commenced. Depending on the nature of the dispute and the parties involved, this can be a sensible approach. Mediation offers a number of benefits.
To begin with, it is generally less expensive and faster than arbitration or litigation. Mediation tends to be much quicker than litigation, where often time consuming Court rules and procedures must strictly be followed. Arbitration, whilst generally faster than pursuing a claim in Court, can be time-consuming whilst the Tribunal is constituted.
An additional benefit is that the parties have complete control over the situation in that the process can be tailored to meet the needs of the parties. It is therefore often the case that the outcome of mediation is more flexible and commercial than an outcome which could be achieved in Court or through arbitration. Like arbitration, the parties can agree that their mediation proceedings will be conducted in private and in confidence. The only stage at which the parties' dispute (and settlement thereof) will become public is if it is necessary to enforce a settlement agreement in Court.
Mediation can only occur with the agreement of both parties. It is not like arbitration or litigation, which are binding forms of dispute resolution and which involves the service of a claim document upon a party, who is best advised to respond or ignore it at their possible peril. Put simply, agreement on the process is needed between the parties before mediation can start. Because mutual agreement is required, the environment is generally more amicable and the parties participate in the spirit of achieving a settlement. This leads to another benefit - if a trained mediator, skilled in conflict resolution is appointed by the parties, the prospects of settlement will be enhanced as the mediator will be well versed in how to gently direct the parties to a settlement. A mediator can also suggest matters that can be included in a binding agreement that the parties want as a result of the mediation, but which are not central to the original legal dispute.
It is important to note that parties who decide to mediate do not relinquish their legal rights or remedies to pursue their claim in another forum. In short, if the mediation process is not successful, the parties can proceed to arbitration or litigation. As to which forum they progress to will depend on a number of factors, including the wording of any written agreement governing their relationship.
What should parties look for in a mediator?
It goes without saying that education and training is essential for mediators. Mediation is unlikely to be successful if the mediator is not skilled in conflict resolution or is unable to manage the process. Different jurisdictions have different requirements to mediator accreditation.
Perhaps most importantly, the mediator needs to understand the role he or she is there to play. The mediator must not, under any circumstances, advocate for one of the parties, or seek to impose their decision or views on the parties. The mediator can, however, guide the parties to reaching not only a settlement, but in the first instance, the scope of what it is they are actually disputing.
Parties should look for potential candidates who demonstrate: a) a commitment to inform participants as to the process of mediation, including confidentiality; b) the willingness to disclose any potential conflicts of interest; c) skills and knowledge in the subject matter of the dispute; and d) solid personal attributes such as communication skills, patience, empathy, intelligence, optimism and flexibility. A mediator with whom the parties are not comfortable or who is lacking in the above characteristics may complicate and hinder the mediation process.
Confidentiality of the Process
Unless there are compelling reasons or the parties agree otherwise, the mediation process should be strictly confidential. A good mediator will inform the parties that communications between them during mediation process are to be private and confidential. As a general principle, the information discussed and disclosed during mediation should not be used as evidence in the event that the matter does not settle at mediation and proceeds to a court hearing.
In a jurisdiction such as the UAE, the concept of "without prejudice" as it is known in common law jurisdictions does not exist. Therefore, the element of confidentiality may not be fully understood or adhered to. If the parties are concerned about confidentiality, added comfort can be achieved by entering into a mediation agreement document with the mediator, which document reflects the confidentiality of the process.
The reason confidentiality is so critical in mediation is that the parties must be able to trust the process. A settlement is unlikely to be achieved unless the parties feel they can be open and honest without compromising their respective positions.
In addition to the signing of a mediation agreement document which preserves confidentiality, other measures parties can take include excluding all those without an interest in the outcome from the process, not recording discussions in a transcript and not creating any external publicity.
What might be involved in the process of mediation?
As stated above, mediation can be distinguished from most other adversarial resolution processes by virtue of its flexibility.
There are typically no compulsory elements to mediation; however, there are a number of recommended steps. One important step is the signing of the mediation agreement document. As stated above, this document might reflect the confidentiality of the process, but it is also useful if the document can set out what exactly is being disputed, in addition to a brief summary of the parties' respective positions. A comprehensive document is not required; however, setting out the parameters of the dispute can bring clarity to the process as well as save time. In more complex disputes, however, parties may choose (and it may be beneficial) to prepare a formal position paper for submission to the mediator prior to the physical hearing.
At the beginning of the actual mediation, it often helps if each of the parties explains their respective positions. Then, with the assistance of the mediator, the issues between the parties can be identified. Even if the issues in dispute have already been set out in writing, it can be useful (for both the parties and the mediator) to hear the issues read aloud at the start of the process.
Once the issues are identified and the background to those issued discussed, options can be identified and debated. It is of course perfectly open to parties to retreat to "break-out" rooms, and also quite common for the mediator to discuss the options put forward with the parties individually.
If at all possible, the next step necessarily involves the narrowing down and refinement of the proposed solutions and, if necessary, the commitment of those solutions to writing. In this sense, it helps if the participating parties are represented by someone with not only good knowledge of the issues and dispute at hand, but by someone with the authority to enter into an agreement if one is reached. There is nothing more frustrating, for all concerned, if an agreement is reached, but which is incapable of execution because no-one has the authority to sign it. Whilst there should be no suggestion that a settlement agreement be entered into in haste, it may be the case the all the good work achieved during the mediation is undone if too much time is granted between the reaching of an agreement and its commitment to writing.
Costs
Consideration must be given to the costs of mediation and who will pay them. In the UAE, unlike in common law jurisdictions, the winner of any Court proceedings should not expect to recover his or her legal costs. In arbitration, particularly international arbitration (depending on a number of factors such as the rules of the institution managing the arbitration, the arbitrators and quite possibly the seat of the arbitration), particularly international arbitration, costs are far more likely to follow the event - i.e. the loser pays the winner's legal costs.
Whilst such an agreement can be reached with mediation, costs, which generally include the venue hire and the mediator's fees, are usually borne equally between the parties.
A careful balance must be struck between attracting quality mediators (and thus creating an effective process) with ensuring that the costs of the process do not get out of control. After all, mediation is and should be a less expensive form of dispute resolution than arbitration and litigation.
It is hoped that this article provides an overview of what is involved in the process of mediation. It is a tried, tested and recommended form of alternative dispute resolution. With careful planning and careful selection of mediator, it can result in a timely and cost-effective settlement. Importantly, if it does not, the parties will still have other dispute resolution methods available to them.
In the last issue of Law Update we looked at arbitration: what it is and what is involved in a set of arbitration proceedings. This month we will look at mediation.
Mediation is a form of alternative dispute resolution (ADR). Compared to litigation or arbitration, mediation is considered to be a less contentious and more amicable forum within which parties can attempt to settle their disputes. It is designed to avoid confrontation.
A third party, the mediator, is involved in order to give structure to the process and to assist the parties to come to a final decision based on the facts presented throughout the discussions. It is important to remember that unlike arbitration or litigation, where the arbitral tribunal or judge issues a decision, the mediator does not hand down a decision. Further, the mediator does not have an advisory role, and nor is he or she there to act as advocate for one or both of the parties. Put simply, the mediator is there to facilitate the parties reaching a decision themselves.
It is also important to note that unlike arbitration or litigation, the outcome of mediation is only legally binding if the parties have so agreed. Generally, the parties will enter into an enforceable settlement agreement reflecting what they decide during the mediation process.
What is the benefit of mediation?
Quite often, tiered dispute resolution clauses provide that mediation must be attempted before arbitration or litigation proceedings are commenced. Depending on the nature of the dispute and the parties involved, this can be a sensible approach. Mediation offers a number of benefits.
To begin with, it is generally less expensive and faster than arbitration or litigation. Mediation tends to be much quicker than litigation, where often time consuming Court rules and procedures must strictly be followed. Arbitration, whilst generally faster than pursuing a claim in Court, can be time-consuming whilst the Tribunal is constituted.
An additional benefit is that the parties have complete control over the situation in that the process can be tailored to meet the needs of the parties. It is therefore often the case that the outcome of mediation is more flexible and commercial than an outcome which could be achieved in Court or through arbitration. Like arbitration, the parties can agree that their mediation proceedings will be conducted in private and in confidence. The only stage at which the parties' dispute (and settlement thereof) will become public is if it is necessary to enforce a settlement agreement in Court.
Mediation can only occur with the agreement of both parties. It is not like arbitration or litigation, which are binding forms of dispute resolution and which involves the service of a claim document upon a party, who is best advised to respond or ignore it at their possible peril. Put simply, agreement on the process is needed between the parties before mediation can start. Because mutual agreement is required, the environment is generally more amicable and the parties participate in the spirit of achieving a settlement. This leads to another benefit - if a trained mediator, skilled in conflict resolution is appointed by the parties, the prospects of settlement will be enhanced as the mediator will be well versed in how to gently direct the parties to a settlement. A mediator can also suggest matters that can be included in a binding agreement that the parties want as a result of the mediation, but which are not central to the original legal dispute.
It is important to note that parties who decide to mediate do not relinquish their legal rights or remedies to pursue their claim in another forum. In short, if the mediation process is not successful, the parties can proceed to arbitration or litigation. As to which forum they progress to will depend on a number of factors, including the wording of any written agreement governing their relationship.
What should parties look for in a mediator?
It goes without saying that education and training is essential for mediators. Mediation is unlikely to be successful if the mediator is not skilled in conflict resolution or is unable to manage the process. Different jurisdictions have different requirements to mediator accreditation.
Perhaps most importantly, the mediator needs to understand the role he or she is there to play. The mediator must not, under any circumstances, advocate for one of the parties, or seek to impose their decision or views on the parties. The mediator can, however, guide the parties to reaching not only a settlement, but in the first instance, the scope of what it is they are actually disputing.
Parties should look for potential candidates who demonstrate: a) a commitment to inform participants as to the process of mediation, including confidentiality; b) the willingness to disclose any potential conflicts of interest; c) skills and knowledge in the subject matter of the dispute; and d) solid personal attributes such as communication skills, patience, empathy, intelligence, optimism and flexibility. A mediator with whom the parties are not comfortable or who is lacking in the above characteristics may complicate and hinder the mediation process.
Confidentiality of the Process
Unless there are compelling reasons or the parties agree otherwise, the mediation process should be strictly confidential. A good mediator will inform the parties that communications between them during mediation process are to be private and confidential. As a general principle, the information discussed and disclosed during mediation should not be used as evidence in the event that the matter does not settle at mediation and proceeds to a court hearing.
In a jurisdiction such as the UAE, the concept of "without prejudice" as it is known in common law jurisdictions does not exist. Therefore, the element of confidentiality may not be fully understood or adhered to. If the parties are concerned about confidentiality, added comfort can be achieved by entering into a mediation agreement document with the mediator, which document reflects the confidentiality of the process.
The reason confidentiality is so critical in mediation is that the parties must be able to trust the process. A settlement is unlikely to be achieved unless the parties feel they can be open and honest without compromising their respective positions.
In addition to the signing of a mediation agreement document which preserves confidentiality, other measures parties can take include excluding all those without an interest in the outcome from the process, not recording discussions in a transcript and not creating any external publicity.
What might be involved in the process of mediation?
As stated above, mediation can be distinguished from most other adversarial resolution processes by virtue of its flexibility.
There are typically no compulsory elements to mediation; however, there are a number of recommended steps. One important step is the signing of the mediation agreement document. As stated above, this document might reflect the confidentiality of the process, but it is also useful if the document can set out what exactly is being disputed, in addition to a brief summary of the parties' respective positions. A comprehensive document is not required; however, setting out the parameters of the dispute can bring clarity to the process as well as save time. In more complex disputes, however, parties may choose (and it may be beneficial) to prepare a formal position paper for submission to the mediator prior to the physical hearing.
At the beginning of the actual mediation, it often helps if each of the parties explains their respective positions. Then, with the assistance of the mediator, the issues between the parties can be identified. Even if the issues in dispute have already been set out in writing, it can be useful (for both the parties and the mediator) to hear the issues read aloud at the start of the process.
Once the issues are identified and the background to those issued discussed, options can be identified and debated. It is of course perfectly open to parties to retreat to "break-out" rooms, and also quite common for the mediator to discuss the options put forward with the parties individually.
If at all possible, the next step necessarily involves the narrowing down and refinement of the proposed solutions and, if necessary, the commitment of those solutions to writing. In this sense, it helps if the participating parties are represented by someone with not only good knowledge of the issues and dispute at hand, but by someone with the authority to enter into an agreement if one is reached. There is nothing more frustrating, for all concerned, if an agreement is reached, but which is incapable of execution because no-one has the authority to sign it. Whilst there should be no suggestion that a settlement agreement be entered into in haste, it may be the case the all the good work achieved during the mediation is undone if too much time is granted between the reaching of an agreement and its commitment to writing.
Costs
Consideration must be given to the costs of mediation and who will pay them. In the UAE, unlike in common law jurisdictions, the winner of any Court proceedings should not expect to recover his or her legal costs. In arbitration, particularly international arbitration (depending on a number of factors such as the rules of the institution managing the arbitration, the arbitrators and quite possibly the seat of the arbitration), particularly international arbitration, costs are far more likely to follow the event - i.e. the loser pays the winner's legal costs.
Whilst such an agreement can be reached with mediation, costs, which generally include the venue hire and the mediator's fees, are usually borne equally between the parties.
A careful balance must be struck between attracting quality mediators (and thus creating an effective process) with ensuring that the costs of the process do not get out of control. After all, mediation is and should be a less expensive form of dispute resolution than arbitration and litigation.
It is hoped that this article provides an overview of what is involved in the process of mediation. It is a tried, tested and recommended form of alternative dispute resolution. With careful planning and careful selection of mediator, it can result in a timely and cost-effective settlement. Importantly, if it does not, the parties will still have other dispute resolution methods available to them.
By Claire Clutterham - Dubai Office
© Al Tamimi & Company 2010
